AGL is shaping a sustainable energy future for Australia, by taking action to prosper in a carbon-constrained world and building customer advocacy. We have set targets to drive performance, behaviours and transparency across a range of sustainability topics, and we report on how we have performed against these targets that we set for FY18.

The landscape of the energy sector is undergoing major transformation. We are committed to taking a leading role in shaping a reliable, affordable and sustainable energy future for Australia throughout this transformation.

Our workplace culture

Workplace culture is crucial to the success of any organisation. At AGL, we are focused on attracting, developing and retaining the right talent to build an anticipatory, engaged and performance-driven culture. By incorporating our company-wide values into our everyday business, our workplace culture ensures AGL is set up for success.

Australia is seeing changes to how we work, play and live (for more information, refer to AGL’s Economic transformation report). We recognise the importance of keeping up with and anticipating these changes, so we are focused on providing our people and prospective workers with a range of benefits that make AGL a great place to work. We also recognise the value that a diverse workforce brings to our success as a company, and its importance in helping our people bring all their energy and capability to their work. That’s why we’re committed to building an inclusive and diverse workplace culture here at AGL.

To help build our culture and drive engagement of our people, we are focused on:

embedding our refreshed company values into the way we work and into the way our leaders lead their people

embedding an enterprise-wide view of talent that draws on a new model of the drivers that influence leadership potential, developed specifically for the unique context of leadership at AGL, that will help build capability and bench strength in our workforce

deploying a new assessment tool to check the health of our culture and engagement of our people and identify further opportunities to enable our strategy through culture initiatives, and

transforming the employee experience through the delivery of best-in-class, simple and integrated technology and digital solutions to enable more efficient and engaging ways of working.

Over the last decade, we have used a consistent model to measure our employees’ engagement. Just as we have reassessed and reset some of our cultural enablers, including our company values and leadership model, we are also reviewing the model and approach we use to measure the health of our workplace culture, ensuring it serves to attract, retain and engage the talented people we need.

We were due to run our biannual engagement survey in FY18. Our findings from the bespoke, company-wide culture assessment we ran in FY16 and our research since indicated the need for us to look beyond our current model of employment engagement and towards an approach that considers a broader range of factors that drive workplace culture in today’s rapidly changing environment. As a result, we made the business decision to not undertake an employee engagement survey in FY18. Instead, in FY19 we will explore and implement a new model for monitoring the engagement of our people and the health of our culture and will use the results from the baseline data to inform performance targets for future years.

AGL Values

Underpinning our workplace culture are our AGL Values. Our values guide the desired behaviours, attitudes and decision-making practices of our people as they go about their work each day.

In FY17 we refreshed our values, consulting with AGL people and reflecting on insights from our customers to ensure that our values aligned with those of our people and the community.

Since then, we’ve been working with our people to strengthen their understanding of, and connection to our values, how they support our strategy and how they can incorporate the values into the way they work.

Our values are:

Safety and beyond

Caring about our people, making it safe to speak up: In our business, safety comes first because physical and mental wellbeing are fundamental to a successful workplace. We create a supportive environment, where we feel safe to challenge the norm, to speak up, to say what we mean. Safety is a shared responsibility; by taking care of each other, AGL becomes a better business for all.

Sustainable thinking

Thinking of the future today, creating a sustainable tomorrow: Taking care of the environment and the community we operate in, is something we consider in everything we do. We are future-focused, proactive and adaptable to change. Every decision we make today is based on always thinking ahead to find the right path forward.

Inclusive of all

Inclusive of all experiences, united in our success: We welcome all and harness our diversity through trust and respect for one another. We seek diverse views, enriching our thinking to drive greater performance. We all work together for the success of AGL.

Focused on what matters:

Focused on our customers, going further to deliver value: All that we do leads to our customers, so we consider them in everything we do, and strive to enrich their experience. We relentlessly push ourselves to go further, to not only improve what we do but to exceed expectations. We give our focus and energy to all the things that matter to AGL’s success, always acting honestly.

Diversity and inclusion

Our AGL Value of ‘Inclusive of all’ reflects our firm belief that an inclusive culture embraces the diversity of our people, enabling them to feel valued and bring all their energy and capability to their work.

Having a workforce that reflects the diversity of the customers we serve, and the communities in which we operate, helps us do better business.

We benefit from the diversity of thought, experiences and ideas; have a greater opportunity to understand and respond to our customers' needs; and are better equipped to anticipate the future and deliver a leading customer experience.

A diverse workforce and an inclusive workplace culture are attractive to potential employees and provide us with an edge when competing for talent and in retaining talented people.

Our Diversity and Inclusion Policy describes our approach to diversity and inclusion and how these attributes are promoted and embedded throughout our business.

AGL’s Diversity and Inclusion Council oversees a comprehensive strategy to build inclusion and foster diversity in all its forms across our workplaces. The Council is chaired by our CEO and Managing Director, Andy Vesey, and during FY18 comprised 15 other leaders from across AGL’s major businesses and geographies, representing different diversity interests. We are focusing on:

continuing to embed AGL’s focus on diversity and inclusion as integral to our values and culture and the way we operate

building strategies that support the diverse needs of our customers and promote AGL as a leader of inclusion in the communities in which we operate

introducing new initiatives that support priority needs of our people including improving accessibility and inclusion for our people and customers

maintaining our focus on gender equality with an emphasis on attracting more women to science, technology, engineering and mathematics (STEM) with a particular focus on our regional locations

supporting lesbian, gay, bisexual, transgender and intersex (LGBTI+) inclusion, continuing with awareness and advocacy initiatives that engages with our people and the community

continuing our company-wide roll out of AGL’s Family and Domestic Violence Training to raise awareness and equip our people on how to recognise the signs and know how to respond to someone who may need support, and

recognising the different forms of flexibility in our different businesses and workplaces, and equipping leaders to confidently manage a flexible workforce.

Flexibility survey

During FY18, we asked our people to voluntarily complete a confidential, company-wide survey to learn more about how our people work flexibly. We wanted to know whether our flexible work arrangements were meeting our people’s needs and learn about their experiences. The survey was completed by a total of 2,033 (54%) of our people, and revealed the following insights:

98% of respondents are aware of our flexible working options and most of our people are happy with AGL’s approach to flexible working.

Close to half of the survey respondents did not see any barriers to working flexibly at AGL, with more than 90% of them feeling confident to ask their leaders to work flexibly.

Adoption of flexible working arrangements varies across AGL, with a higher uptake across our corporate sites.

78% of men who responded to the survey said they work flexibly, compared to 81% of women, with the most common flexible work adopted being flexible start and finish times, and working from home and other locations.

The survey confirmed that our approach to flexible work is an enabler, providing our people with the capacity to manage personal and work commitments, with the most common reasons for accessing flexible working arrangements being caring responsibilities, avoiding or reducing commuting time and personal health issues. The survey also revealed that there are barriers to working flexibly due to the nature of some roles, particularly those in our operational sites and contact centres. To ensure everyone can use the flexible working options available to them, we will be focusing on doing more to support these areas where flexibility has been found harder to implement.

Gender diversity

We recognise the positive relationship between increased representation of women on company boards and in senior management positions, and improved financial performance. We focus efforts on removing barriers to women advancing their career, including mainstreaming flexible work.

AGL’s CEO, Andy Vesey, is a member of the Male Champions of Change. This national group is made up of influential male leaders representing a diverse range of significant Australian employers spanning government, retail, financial, energy, consulting, consumer goods and mining sectors. Members have a deep personal commitment to advancing gender equality in their organisations and have extensive reach across the Australian community. The group is convened by Elizabeth Broderick AO, the United Nations Human Rights Council Special Rapporteur.

AGL’s Chairman, Graeme Hunt, and AGL non-executive directors Les Hosking and Diane Smith-Gander, are members of the '30 per cent Club' which advocates for women to account for at least 30% of all directors on ASX 200 boards by the end of 2018.

We set a three-year target to achieve 40% representation of women in the Senior Leadership Pipeline by the end of FY19. Two years in, at the end of FY18, the Senior Leadership Pipeline comprised 42% women, up from 38% in FY17 as a result of an increased focus on gender diversity. During FY18, the external appointment rate of women to the Senior Leadership Pipeline was 52%, and the internal appointment rate of women to the Pipeline was around 41%2.

In addition, we have maintained our performance relating to the representation of women on the Executive Team, which was 30% by the end of FY18 (FY17: 30%). Similarly, the representation of women in the Enterprise Leadership Team3 increased to 48%, up from 44% in FY17.

Reflecting our progress to date, we’ve set a new target to increase the number of women in the Senior Leadership Pipeline to 50% by FY22.

AGL’s Board also committed to achieving a target that, by 1 January 2018, 30% of AGL's non-executive Directors would be female. This target was met with the appointment of Diane Smith-Gander to the Board in September 2016, joining Jacqueline Hey and Belinda Hutchinson to bring the percentage of women as a proportion of non-executive Directors to 42.9%. As a proportion of Directors (inclusive of Andy Vesey, AGL's Managing Director and Chief Executive Officer), as at 30 June 2018 women made up 37.5% of Directors on AGL's Board. We are one of 30 ASX 50 companies with more than 30% female representation on our Board.

We review gender pay equity bi-annually at AGL, before and after the annual remuneration review. Further details are provided in the Fair pay section of this chapter.

We have identified opportunities to improve our recruitment processes, with a focus on the representation of women on the shortlist for senior roles and less-traditional occupations, and on hiring panels. The representation of women in the Senior Leadership Pipeline is included as a closely watched number in monthly performance reporting and discussions with our Executive Team. All members of the Enterprise Leadership Team have a gender diversity Key Performance Indicator (KPI) that is linked to their performance rating and remuneration outcome.

Gender diversity is monitored at all levels of the organisation. In May 2018, we submitted our Workplace Gender Equality Report to the Workplace Gender Equality Agency, complying with the Workplace Gender Equality Act 2012.

Gender breakdowns of employees’ employment status, contract type, location and turnover rates are available in the data centre.

During FY18, our women and men’s employee network, AGL Equality, sponsored and delivered a series of initiatives and events including piloting the STEM Sisters community initiative at Loy Yang, and celebrating International Women’s Day 2018 across all our major workplaces, including regional operational sites. The network advocates for gender equality and strives to empower women to achieve their career goals by providing opportunities to connect and grow.

From 1 July 2017, we increased our paid parental leave entitlement from 14 weeks to 20 weeks, providing greater flexibility for our people who are primary carers to take essential time to bond with and care for their new babies.

Visit the data centre for details on our parental leave utilisation and return to work rates.

Family and domestic violence

Recognising the importance of safety in the workplace, the home and in the community, we have introduced company-wide training on family and domestic violence. Called 'Safe Space', this training aims to raise awareness about this important societal issue and offers support resources and tools, including a dedicated Family and Domestic Violence Helpline. Our approach complements our existing Family and Domestic Violence Policy and aims to help our people feel comfortable and safe to speak up and ask for help when they need it, and help AGL people to respond in a caring and inclusive way. It also encourages our people to consider unhealthy behaviour in themselves, and, if they are perpetrators of violence, to seek support.

By the end of FY18, more than 1,200 AGL people in our Sydney and Melbourne workplaces had attended the training. Family and Domestic Violence Training continues to be rolled out at our other sites.

Lesbian, gay, bisexual, transgender and intersex (LGBTI+) inclusion

Our LGBTI+ inclusion strategy aims to inspire a culture where our people feel valued, safe and able to perform at their best.

An important part of our LGBTI+ strategy is ensuring that employees seeking help with LGBTI+ related issues have access to appropriate support. Employees can obtain information and support from a nominated member of the LGBTI Ally Network, AGL Shine. During FY18, AGL expanded its support to include a dedicated LGBTI+ support line, operated as part of our Employee Assistance Program.

We aim to improve mental health within our LGBTI+ employee base, eliminate stigma and discrimination, and be recognised as an inclusive employer that incorporates LGBTI+ people in a leading diversity strategy.

We recognise our company’s regional reach and we’ll continue to use this position to promote inclusion and break down barriers in communities in which we operate. During FY18 we prioritised the following activities in our operational locations:

launching Gippsland’s first ever Pride Cup in July 2017, and in celebration lighting up Loy Yang’s cooling towers in rainbow colours

celebrating Trans diversity at the Broken Heel Festival, and

continuing to build links with local LGBTI+ groups and partnering with Adelaide’s Feast Festival, an annual LGBTI+ arts and culture celebration.

Other highlights in our work for LGBTI+ inclusion included:

publicly advocating for Marriage Equality with our CEO and Managing Director Andy Vesey discussing with LGBTI and mainstream media the benefits of a truly inclusive workplace and the importance of LGBTI+ inclusion to AGL

proudly sponsoring and collaborating in key LGBTI+ events including Mardi Gras, Mardi Gras Film Festival and Midsumma Festival, and

collaborating with Medibank and other corporates to produce a social media video on ‘Advice you would give your younger self’ in support of LGBTI+ youth for Wear It Purple Day.

During FY18, we completed the Australian Workplace Equality Index (AWEI) for the fourth year. The Index is administered by Pride in Diversity, and sets the national benchmark for LGBTI workplace inclusion. We are proud to have been awarded a Gold Employer status for the second year in a row, confirming AGL as an industry leader, and among the top 10 percent of the 135 employers who participated in the AWEI in FY18.

Indigenous engagement

AGL’s Indigenous engagement working group formed in 2016 to recognise, respect and raise awareness about our shared Indigenous history and culture, and to support inclusive workplaces for all employees.

The working group hosts events and educational forums on significant dates, including National Reconciliation Week and NAIDOC Week. To help promote respect, awareness and connection to place for Aboriginal and Torres Strait Islander Australians, the group developed Welcome to Country and Acknowledgement Guidelines ensuring AGL incorporates this protocol in its official meetings and events.

Over FY19 we plan to establish an internal committee to oversee development of a Reconciliation Action Plan (RAP), in consultation with Reconciliation Australia.

Talent

So we can deliver on our strategy, we need people with the right skills and who are the right fit for our workplace culture. Our customers and other stakeholders benefit by dealing with enthusiastic and engaged people who reflect the diversity of the community, and our business benefits through decreased attrition rates. In short, a positive stakeholder experience delivered by great people reflects in our bottom line and in shareholder value.

Our priorities are:

defining and embedding a compelling employment value proposition (the unique rewards and benefits we offer to the people who choose to make AGL their workplace), supported by a strong employer brand, that ensures AGL can attract and retain people with the skills, capabilities and experiences it needs for success

ensuring organisational bench-strength with an emphasis on talent identification and pipelining as inputs to robust succession planning for executive leadership and other critical roles

embedding AGL’s new talent process which delivers an enterprise-wide view of talent, with the Executive Team jointly accountable for the placement and development of all people identified as key talent, and

supporting targeted development of AGL people through a range of solutions including internal and external learning programs, and critical experiences gathered on the job in the form of key projects, secondments and other internal and external placements.

Transforming the way we work

To help build our culture and further engage our people, we are transforming the way we work through the digital transformation of our enterprise resource planning processes and technology suite. This program of work, known as our 'People, Process and Performance Transformation project (or 'PT3'), will improve the digital experience to our people, improving the way we work across teams, enhancing collaboration, and engagement.

PT3 will deliver new ways of working that remove many administrative tasks and create capacity to focus on critical activities that drive business value. The digital platforms will also enable us to focus on activities that add real value to the business delivering robust data to drive analytics and business insights. This in turn will support reporting and timely decision making.

Our people will have an enhanced employee experience supporting our aspirations to be an employer of choice. They will be able to engage directly through self-service platforms, connecting them to support in their role, their work and their learning in a workplace environment that is mobile and flexible.

Over FY19, we will roll out technology and process solutions that cover end-to-end people processes; health safety and environment; finance, procurement and payroll processes across the organisation; as well as work management processes in our operational businesses areas.

Employee value proposition (EVP) and employment brand

A strong EVP creates a strong employer brand to attract talent from the external market. In FY18, we focused on three areas to strengthen our position as a career destination of choice:

Talent attraction: Methods for attracting talent have been enhanced with the creation of engaging and authentic digital content that showcases the talent and opportunities within AGL. These videos are available to view on our website.

Partnerships to connect with talent pools: We have partnered with FlexCareers and Work180 to create platforms for sharing our commitment to flexible working. A successful internship was piloted in partnership with CareerSeekers and CareerTrackers, creating opportunities to connect AGL with talent from New-Australian and Indigenous backgrounds. Internships also continued across our regional workplaces, strengthening AGL’s connection to the communities in which we operate and providing opportunities for emerging local talent to experience life at AGL. FY18 also saw AGL join the Veterans Employment Coalition and establish partnerships with Soldier On, Defence Community Australia and Department of Veteran Affairs to better understand and overcome the unique challenges that Veterans face in building careers.

Enterprise recruitment operational model review: We completed a full review of our recruitment operational model and commenced work to move towards a unified way of going to market to attract talent across all of AGL.

Talent management

During FY18, AGL launched a new talent strategy designed to deliver end- to-end talent solutions that deliver on AGL’s strategic talent priorities of diversity and inclusion, capability development and a strong talent pipeline.

Talent and leadership at AGL starts with our values. AGL leaders lead with the values, creating values-based environments for our teams to thrive.

Our leadership potential drivers form part of our refreshed approach to Leadership and Talent at AGL. They describe what high potential leadership at AGL looks like, and will inform the way we identify and assess potential.

In FY19 we will continue to deploy and embed the new talent framework, providing guidance for leaders and anyone aspiring to a senior leadership role at AGL.

Developing our people

During FY18, over 145,000 hours of training (averaging 39.5 hours per FTE) was delivered to our people, including over 3,800 hours of leadership training, more than 25,000 hours of compliance training, over 47,000 hours of contact centre training and more than 62,000 hours of group operations technical, safety and systems training. In addition, over 1,400 AGL employees completed the Better Mental Health training program during FY18.

In FY18, AGL offered the Illuminate and Illuminate Plus leadership development programs to a third cohort of AGL women. AGL’s Board and Executive Team attended a graduation event for the 16 women who participated in the Illuminate Program and a further five senior female leaders who participated in the Illuminate Plus program. The program combines group work, one-on-one coaching and workshops with participants’ leaders. Participants in the Illuminate Plus also have the opportunity to shadow Executive Team members. The program is achieving very positive results with 86% of participants reporting increased confidence and resilience post program and 13% taking up broader roles or promotions within 12 months post program.

The Illuminate programs will be run again in FY19 to ensure AGL continues to offer valued and successful solutions to support the development of women into leadership.

Turnover

Total turnover, which includes voluntary turnover (attrition) and involuntary turnover, decreased to 14% in FY18 from 15% in FY17 as our new organisational structure was embedded.

Attrition increased to 11% in FY18 from 9% in FY17. Attrition rates increased for employees in the age 55-59 and 60-64 age brackets, reflecting the impact of voluntary redundancy opportunities in operational business units. A breakdown of attrition rates and new hires by age and gender is available in the data centre.

With the gradual implementation of a new talent model beginning in FY18, we have had to adjust the cohort against which we can measure key talent retention over the FY18 reporting period. In this first year of operation of the new talent model, we are able to report the retention rate of talent for the Enterprise Leadership Team (ELT) only. The ELT was the only cohort to have completed talent reviews during FY17; therefore, key talent in this cohort has provided the baseline for assessing talent retention in FY18.

As the new talent model rolls out further through the organisation, we will measure retention of key talent in a larger cohort. In FY19 the metric will measure the retention of key talent in a cohort that includes the Enterprise Leadership Team and their direct reports.

During FY18, the retention of key talent across AGL was 81%, down from 93% recorded in FY17 based on total turnover, reflecting the changing focus of the business and the smaller size of the group being measured (i.e. Enterprise Leadership Team) in FY18. This met our target to keep retention of key talent above 80%, and highlights that AGL continues to provide an employee value proposition that retains those in the enterprise leadership team.

Fair pay

At AGL, we believe that our people should be fairly remunerated for the work they do. We have robust policies, frameworks and processes in place to ensure fair and market-competitive remuneration, which is a key component of the suite of benefits and rewards that help us to attract and retain talented people.

Gender pay equity

We assess pay equity by business unit, work level and site (using non-EBA payroll data), with our most recent pay equity analysis being undertaken as at 31 January 2018. When comparing average fixed remuneration for females and males across AGL, there is an 8.7% differential in favour of males. Further analysis of the data reveals that this is chiefly created by the work level profile of our employees i.e. there are more male than female incumbents in senior level roles, which receive higher fixed remuneration. This can be particularly predominant in some of our operational sites. Gender pay equity is a long-term commitment of ours - it embodies our values ‘inclusive of all’ and 'sustainable thinking' – and we undertake regular reviews and have policies and training programs in place to address any gender pay gaps.

Gender pay equity analytics and reporting are embedded in our annual remuneration review system. Supporting processes, such as training for leaders involved in remuneration decisions, ensure gender equity is at the forefront of people processes. Our diversity and inclusion strategy includes initiatives to address the drivers behind the gender pay equity gap, including improvements to hiring practices, implementation of inclusive leadership training, and leading talent programs designed for women at emerging and senior level to support their development and career progression.

Enterprise bargaining agreements

In negotiating new enterprise agreements, AGL seeks to balance the long-term interests and sustainability of our people, our customers, and the community. We support our people’s right to negotiate for enterprise agreements. Our people who are covered under an enterprise agreement have the assurance of being better off overall than if they were paid strictly in accordance with the modern award. AGL sees access to union representation as a human right, and we support our people’s decisions in this regard.

During FY18, we progressed the following enterprise bargaining agreements:

Victorian Customer Solutions: During FY18, we successfully re-negotiated the AGL Retail (Victoria) Enterprise Agreement which was approved by employees and came into effect on 18 January 2018.

Hydro Operations: During FY18, we successfully re-negotiated the AGL Hydro Agreement which was approved by employees and came into effect on 10 January 2018.

At the end of FY18, negotiations were close to being finalised for the AGL Somerton Agreement and were underway for the AGL Torrens Island Enterprise Agreement.

Reward, recognition and remuneration

The key objectives of the AGL remuneration framework are to attract, retain and motivate our employees and to align our performance with rewards. This is particularly relevant for those executives responsible for driving the performance of AGL, which subsequently creates value for our shareholders. During FY18, AGL reviewed the executive remuneration framework with respect to the remuneration policies and practices in place across companies in the S&P/ASX 50 Index to ensure our framework remains market competitive and continues to align with our strategic objectives. For FY19, we are committed to continuing this review and engaging proactively with stakeholders prior to implementing any proposed changes in FY20. For further details, visit AGL’s 2018 Remuneration Report.

During FY18, AGL launched Energise, our new employee recognition program. Designed around feedback from our people, Energise has four nomination categories (Safety, Innovation, Community and Customer), underpinned by the AGL Values and designed to support the achievement of our Strategic Imperatives. Since its launch in November 2017, 78% of our people have visited the Energise portal, with 33% giving and 66% receiving recognition, either in the form of a non-monetary ‘High 5’ award, or a monetary ‘Shout Out’ or ‘Ovation’ award.